Li‐ and Mn‐rich layered oxides (LMROs) are recognized as promising cathode materials for lithium‐ion batteries (LIBs) due to their high specific capacity and cost efficiency. However, LMROs encounter challenges such as manganese dissolution in electrolytes and the release of oxygen gas from irreversible oxygen redox reactions, leading to structural degradation and voltage decay that reduce energy density. Consequently, recent research has shifted toward employing LMROs in all‐solid‐state batteries (ASSBs), where Mn dissolution is negligible. Herein, nanostructured LMROs demonstrate superior electrochemical compatibility with sulfide‐based solid electrolytes in ASSBs compared to conventional LIBs. Nanostructured LMRO exhibits outstanding capacity retention (97.1% after 1300 cycles at 30 °C) with significantly suppressed voltage decay. Furthermore, the initial electrochemical activation of Li2MnO3 domains within LMRO is explored in terms of the mechano‐electrochemical interactions in the composite cathode. At elevated temperatures, interfacial degradation accelerates due to the chemical oxidation of Li6PS5Cl solid electrolytes, driven by oxygen released from LMRO. To address this, LMRO surfaces are modified with thioglycolic acid through esterification, suppressing interfacial degradation of Li6PS5Cl and ensuring stable capacity retention over 500 cycles at 60 °C. These findings underscore the potential of LMRO materials as promising cathode options for ASSBs, surpassing those used in LIBs.